Swiss power-grid and automated-equipment maker ABB Ltd. said its first-quarter net profit fell less than expected, despite declining energy prices and slower economic growth in China.
Profit was bolstered by a $200 million bump in cash flow from operations, Zurich-based ABB said. Shares of ABB rose more than 3% in morning trading, when most blue chip stocks in Switzerland were in decline.
Net profit fell 11% to $500 million in the three months to end-March from $564 million in the same period last year, ABB said. Revenue fell 8% to $7.9 billion, the company said. Analysts had expected net profit of $437 million, and $8.05 billion in revenue.
ABB said a stronger U.S. dollar cut into its reported revenue figure in the period by about 5%.
During a conference call with reporters, ABB Chief Executive Ulrich Spiesshofer cited the company’s success in boosting profit margins, cash flow, and its backlog of orders despite tough market conditions in the quarter. He also deemed the company’s bid to turnaround its power grids business “successful.”
Analysts at J. Safra Sarasin noted that ABB topped expectations for both profit and orders in the quarter, and called its overall results for the period “solid.”
Recent struggles for the oil and gas industry, in addition to weaker demand in developing economies such as China—a key market for ABB—have hindered the performance of a number of international industrial equipment makers such as General Electric Co. and Siemens in addition to ABB.
ABB said first-quarter orders declined 11%, to roughly $9.3 billion. The company said it had a difficult comparison to the “significant large orders” booked in the same period last year.
Looking ahead, ABB cited “a mixed picture with continued uncertainty.”
The company said it expects further growth in the Chinese economy this year, albeit at a slower pace than last year. Growth remains “modest” in Europe, ABB said, which has combined with geopolitical tensions in other parts of the world to create difficult conditions.
ABB’s CEO said in a statement that the company’s strategic portfolio review of its power grids division continues, and that ABB plans to disclose related details in October.
Source : wsj.com